Medical Instruments

INDUSTRIAL CODES

NAICS: 33-4510 Electromedical and Electrotherapeutic Apparatus, 33-4517 Irradiation Apparatus Manufacturing, 33-9112 Surgical and Medical Instrument Manufacturing, 33-9113 Surgical Appliance and Supplies Manufacturing, 33-9114 Dental Equipment and Supplies Manufacturing

SIC: 3841 Surgical and Medical Instruments and Apparatus, 3842 Orthopedic, Prosthetic, and Surgical Appliances and Supplies, 3843 Dental Equipment and Supplies, 3844 X-Ray Apparatus and Tubes and Related Irradiation Apparatus, 3845 Electromedical and Electrotherapeutic Apparatus

NAICS-Based Product Codes: 33-45101, 33-45103, 33-451701, 33-911201, 33-911202, 33-911204, 33-911205, 33-9112,06 33-9112, 33-91131, 33-91135, 33-91141, and 33-91143

PRODUCT OVERVIEW

A Functional Classification

Second only to pharmaceuticals, which deal directly with the body at an even deeper and more basic level—the cellular and sub-cellular foundations—medical instruments represent one of the most complex technologies humanity has developed. Medical instruments present a bewildering variety of tools, ranging from tiny objects to huge and complex machines. To get some perspective on the field we can begin by grouping instruments and devices into four categories: diagnostic, corrective, therapeutic, and prosthetic. To these one might add auxiliary tooling, supplies, and devices that protect the patient or the caregiver.

Diagnostic tools, ranging from the stethoscope to X-ray, CAT scan, and ultrasound devices, are all instruments used to listen to, obtain echoes or to extract fluids from, to measure heat in, to peer into, to scan, probe, chemically sample, examine, enlarge for view, photograph, image, snip tissue in biopsies, and to capture electronic signals from the body. They are a means of obtaining information from the vast chemical civilization that the human body represents in order to determine its state of health.

Included under the category of corrective instruments, as used in this categorization, are instruments used in surgical procedures and in orthopedic and dental work—activities that intervene and change the body in order to correct defects. Many of the instruments used in such procedures cut tissue and/or drill or cut bones and teeth. Devices left in place, temporarily or permanently, such as staples, plates, and screws, belong in this category. A wide array of instruments aid the surgeon or the dentist ranging from forceps, clamps, and suturing needles to complex specialized equipment, including microscopes, to aid in microsurgery. Other instruments are designed to aid the patient, including anesthesia apparatus, intravenous transfusion equipment, heart-lung machinery, and monitoring instruments consulted during surgery. Special operating tables and lighting systems are grouped with surgery, dental chairs with dentistry, while post-operative devices such as orthopedic braces are part of the corrective instrumentation category.

Therapeutic instruments are associated with kidney dialysis, blood transfusions, inhalation therapy, muscle exercise apparatus, chemical and radiation therapy for cancer, catheters to remove urine following bladder surgery, and other specialized equipment.

Under the prosthetic category fall a wide range of instruments that replace or augment bodily functions. Hearing aids are included under orthopedic and prosthetic appliances in most industrial classifications; eyeglasses and contact lenses are usually not viewed as medical instruments but are the most common prosthetic devices used by the population. Artificial but implanted eye lenses are permanently part of the body; as are pacemakers and defibrillators for cardiac arrhythmia. Stents—tiny hollow tubes—inserted in cardiac arteries to keep arteries open are permanently implanted devices, as are artificial heart valves. In the dental field artificial teeth belong under this category. In orthopedics the most common instruments are artificial knee and hip joints. Artificial limbs are probably the oldest prosthetics used by humanity. Artificial grafts made of braided or meshed synthetic fibers and implanted in surgery in effect serve as prosthetic tissues and ligaments.

To these four major categories, the following categories are added: auxiliary tooling, supplies, and devices that do not handily fit within the major categories. Examples include products that provide special environments such as incubators for infants, oxygen tents, and specialized hospital furniture. Sterilizing devices, including autoclaves and ultrasonic medical cleaning equipment, are part of medical instrumentation, as are all types of protective devices such as radiation shielding aprons, sheeting, and gloves. Inseparable from this group are many categories of supplies directly associated with instrumentation, such as highly-engineered ligatures and sutures.

The U.S. Census Bureau identifies approximately 200 major product categories that fit the definition of medical instruments and supplies, the majority being instruments. Furthermore, each category, when looked at in detail, branches into numerous product lines which, in turn, branch into many products. A single instrument category, for instance, endoscopes used for looking into the body with a light, are used in arthroscopy (joints), bronchoscopy (respiratory tract), colonoscopy and proctosig-moidoscopy (colon), colposcopy (cervix), cholangioscopy (bile duct), cystoscopy (urinary tract), esophagogastrodu-odenoscopy (gastrointestinal tract), Falloscopy (Fallopian tubes), fetoscopy (fetus), laparoscopy (abdominal/pelvic cavity), rhinoscopy (nose), and thoarascopy and mediastinoscopy (chest). Similar profusion marks many categories of medical instruments.

Industrial Classification

In the Census Bureau's system of classification, medical instruments are distributed among five major manufacturing industries: Surgical and Medical Instruments, Dental Equipment and Supplies, Surgical Appliances and Supplies, Irradiation Equipment, and Electromedical and Therapeutic Apparatus.

The first two industries reflect the traditional division of the medical profession into the medical/surgical and dental categories. Virtually all of the surgical and medical category consists of instruments; approximately half of the dental category deals with equipment, the rest with supplies. Surgical appliances complete the product array that serves the medical profession. The products of that industry are dominated (as measured in dollars of shipments) by supplies, but approximately 37 percent of that industry properly fits the instrument category if instrument is interpreted broadly enough to include highly engineered devices such as artificial joints and limbs, breathing devices including incubators, engineered sutures, implantable lenses, protective gear, stents, and surgical kits.

The last two industries separate out instruments that represent modern technological advances in diagnostic and therapeutic methods based on X-ray technology and electronics. One industry goes back to the time just before the twentieth century dawned and the other, just after, but irradiation is the older technology. X-ray equipment uses invisible rays in the ultraviolet range of the electromagnetic spectrum to let us look into the body. UV radiation has very short waves. These penetrate the body more easily, whereas visible light is all reflected back. The differential densities of bones and tissues capture some waves but let through the rest, and the contrast, captured on sensitized film, gives us a view of our interiors. X-rays were discovered by William Conrad Roentgen, a German physicist, in 1895. The first practical electrocardiogram (or EKG) machine was developed by Willem Einthoven, a Dutch doctor, in 1903. The K in EKG comes from the use of the word kardiogramm in Germanic languages for cardiogram in English. EKG technology is capable of capturing the very faint electrical impulses generated by the chambers of the heart. These two devices, the X-ray machine and the EKG, represent the seed products out of which the Irradiation Equipment and the Electromedical Apparatus industries arose.

The Big Machines

Looking from the first decade of the twenty-first century back to 1970, the big change that is seen is the appearance of expensive and physically large diagnostic machines known principally by their initials—CAT, MRI, and PET. All of these devices and their variants emerged in the 1970s, but have since revolutionized diagnostics while also dramatically increasing expendi-tures on medical instrumentation. The new technologies, alongside the much less expensive ultrasound methods, are techniques of medical imaging. They show the insides of living bodies in much sharper view than the humble X-ray can, with the highest-end devices providing astonishingly high-resolution, three-dimensional color pictures of organs, and their components, as selected by the examining physician, viewable from every side and angle.

Computerized axial tomography (CAT)—more and more shortened to computerized tomography (CT)—is the modern extension of X-ray photography. For this reason CT scanners are reported as a product of the Irradiation Equipment industry. Tomography derives from the Greek word tomos, meaning a cut or slice. CT scanners take pictures of the inside of the body in slices from changing angles. Computerized methods are used to combine images into three-dimensional representations. The original CT scanners had a single ray-detector ring, in the center of which the body moved on its bed. Such machines had become the low-end of the product category by the end of the first decade of the twenty-first century, known in the field as single-slice scanners. High-end machines have multiple detector rings and are known as multi-slice machines. Godfrey N. Hounsfield of Britain is credited with the invention of the technology, announced in 1972. American, Allan McLeod, made the same discovery independently at around the same time. Both men won the Nobel Prize for the invention of CAT. American, Robert S. Ledley, perfected the first full-body CAT scan device in 1975.

Although magnetic resonance imaging (MRI) has many parents—the technology vitally depends on a long series of discoveries in quantum physics—Raymond Damadian is credited with developing and demonstrating, in 1977, the first MRI machine of the type now in use. MRI technology relies upon powerful magnetic fields and radio waves. The fields cause the temporary alignment of hydrogen atoms in the body with the magnets' pull, and radio frequency (RF) waves are directed at those parts of the body to be imaged. The hydrogen atoms absorb the energy of the radio pulse. The energy also affects their alignment in the magnetic field. When the RF pulse is stopped, the atoms release the energy as radiation as they conform to the magnetic field again. Release of the energy acts as a signal that the MRI's detectors acquire and record for analysis. The different concentrations of hydrogen in different types of tissues enable the MRI machine, assisted by computers, to translate the radio echo coming from the hydrogen to create an image of the area under study. Very high resolution images are possible. Tumors and lesions in healthy tissues become visible by contrast.

Positron emission tomography (PET) was developed by Michael E. Phelps and his colleagues at Washington University School of Medicine in 1975. This technology also relies on basic physics. When electrons come in contact with anti-electrons (positrons) they eliminate each other and produce a pair of gamma-ray photons. Patients about to undergo a PET scan are first medicated with a sugar (fluorodeoxyglucose) containing a radioactive tracer. The tracer has a relatively short life and, as it decays, it emits a positron. The positron comes in contact with an electron and they eliminate one another. The PET scanner's detectors pick up the gamma radiation that results and use it to image the organ under study. A period of time, typically an hour, must elapse between the patient's medication and the actual scan to ensure that the active tracer substance reaches the organ under study by means of the blood stream. PET scanners have developed into PET/CT devices, which combine the functions of a PET scan based on radiation and a CT scan based on X-ray slicing for even sharper and more complete results.

Each of these technologies has benefits and limitations. CT scanners subject individuals to X-rays and PET scanners to radiation. The radioactive tracers used in PET scans are expensive, must be produced in particle accelerators, and the tracers must be combined with the sugar substrate in laboratories shielded from the public because they handle radioactive materials. MRI scanners produce very high magnetic fields and cannot be used by people with any kind of metallic implants in the body. Close confinement in the MRI tube and immobilization of the body for effective imaging limit MRI to people who do not suffer from claustrophobia or anxiety. New machines, open at the top, are being introduced to deal with confinement-anxiety.

The big machines are highly valued by the medical profession which, in a manner of speaking, was blind until the twentieth century but now can see—and in detail. The costs of this transparency, however, are high. Capital costs range from $400,000 to $800,000 for single-slice CT scanners, $1.2 million to $1.6 million for multi-slice scanners, and $1 million to $2.5 million for PET scanners. The average MRI machine weighs in at $2 million, a PET/CT machine at $3 million. Annual maintenance costs, including component replacements, run very high was well. For MRI machines, for instance, the average annual maintenance is $800,000. Image management becomes a major burden for users of such equipment, forcing them to invest in picture archiving systems (PACS), which start at $200,000. Not surprisingly, therefore, the cost to patients or their insurers is also high. According to data published by the Pennsylvania Health Care Cost Containment Council, CT scans cost $500 to $700, MRIs run $700 to $900, and PET scans cost $2,000. Somewhat lower and much higher costs-per-scan are reported by others.

The Lower Tier

In contrast to the big machines, it is interesting to look at representative medical systems that represent a lower tier in both price and physical size. Data available from the U.S. Commerce Department's Current Industrial Reports (CIR), which selectively feature production data in units as well as in dollars of shipments, enable us to examine some of these devices from an economic perspective.

X-ray machines of all types (including non-medical units) were valued at the factory gate at $58,000 each in 2005. X-ray tubes used for replacement averaged $6,000 each. In 2005, 6,400 X-ray machines and 32,000 tubes were made. Ultrasound systems shipped had a value of $21,000 each; the industry manufactured 64,000 units. Ultrasound devices are also imaging machines. They send sound waves into the body at high frequencies inaudible to humans. Sounds echo back from tissues and are captured by the machines and rendered as images by computer software. The patient feels only a vibration. In 2005 the industry made 102,000 EKG machines with an average value of $1,800 each. The CIR also reported the production of 350,000 defibrillators in 2005—an important electronic therapeutic category. Defibrillators were valued at $7,300 at the factory. The Census Bureau did not report data on heart pacers, which cost more. Excluding the cost of medical procedures associated with pacemaker implantations, data from the National Institutes of Health, cited by Aetna InteliHealth, indicate costs on average greater than $10,000 per unit.

In contrast with these devices in the more modest cost—but relatively high unit output—range, CIR also reported data on one of the big machines—CAT/CT scanners of single and multi-slice type. In 2005 the irradiation equipment industry produced 2,300 such devices valued at $666,000 per unit on average, thus eleven times higher than X-ray machines, the largest of the lower-tier devices. Shipment values used in this section must be marked up minimally by 50 percent to get an estimate of the final sales value as experienced by a hospital. To that must be added another substantial mark-up for installation for larger systems.

MARKET

Combined shipments in 2005 of the five major industries that include medical instrumentation—electromedical, irradiation, surgical and medical instruments, surgical appliances, and dental equipment—were $83.3 billion. These industries shipped product valued at $46.4 billion in 1997, indicating growth for the group at a rate of 7.6 percent annually, a rate well above that of the U.S. economy as a whole. In the 1997–2005 period, Gross Domestic Product (GDP) grew at the rate of 5.2 percent yearly. Shipments of the group, subdivided into the participating industries, are shown in Figure 140.

In looking below the aggregate, the largest industry in the group, Surgical Appliances and Supplies, also had the fastest growth. The industry advanced at an annual rate of 9.2 percent per year from shipments valued at $13.5 billion in 1997 to $27.3 billion in 2005. The bulk of this industry's shipments, however, fall outside the general definition of medical instruments and auxiliary products. Approximately 40 percent of shipments fell into the instruments category. Of that total (approximately $1.6 billion in 2005) approximately 84 percent were represented by prosthetic devices, principally artificial joints and cardiac stents. Data from the Census Bureau were not sufficiently detailed for 1997 to determine whether or not these products were responsible for the industry's growth as product data for 1997 were not available. That innovative products like joints and stents gave the industry its impetus is very likely, however. The first experimental stent was placed in a dog in 1969. Human implantation began to take off after 1994 when the product and techniques for its implantation had matured. Artificial hip joints date back to the 1960s and artificial knees to the 1970s. Both types of devices saw major improvements later. Behind their growing use is a demographic phenomenon. In the 1997–2005 period, the population aged 45 and older—the group most likely to need knee and hip replacements—had been growing at a rate of 2.6 percent per year, thus at nearly twice the rate of the population as a whole (1.4% per annum).

Surgical and Medical Instruments, the second largest industry, and Dental Equipment and Supplies, the smallest industry, had the slowest rates of growth. Surgical/medical instruments increased 54 percent between 1997 and 2005, from $16.7 to $25.8 billion, an annual growth rate of 5.6 percent. Most of this industry's equipment is directly related to surgical procedures (85%), and the rest to diagnostic equipment (15%). Surgical and Medical Instruments experienced a drop in shipments between 2001 and 2002, most likely due to the late-2001 recession and the effect of the September 11, 2001, terrorist attacks against the United States. Many surgeries are elective and may have been postponed, resulting in slowing purchases.

Dental Equipment and Supplies increased 53 percent in this period, growing from $2.3 billion to $3.6 billion, or 5.4 percent per year. In the context of medical instrumentation, however, low growth rates still represented growth outperforming the U.S. economy.

Electromechanical and Therapeutic Apparatus saw its shipments increase from $10.4 to $19.7 billion, growing 8.3 percent per year. Most of the industry's shipments in 2005 were in the therapeutic products category (49%), with defibrillators and dialysis systems representing important product categories; diagnostic systems accounted for 28 percent of shipments including ultrasound, MRI, and EKG devices along with a large number of other kinds of devices. Surgical systems including electrosurgery, heart lung machines, and blood flow systems represented 9.2 percent of shipments, and hearing aids, in the prosthetics category, accounted for 5.6 percent. Other shipments were not specified by kind in Census Bureau statistics.

Irradiation Apparatus, next to the last in size, had the second highest growth rate. Industry sales advanced from a 1997 level of $3.4 billion to 2005 shipments of $6.8 billion—an increase of 9.0 percent per year. This industry, with 81 percent of shipments in diagnostic equipment (CT and PET scanners and X-ray machines) also had sales in therapeutic irradiation equipment (9%) with and non-medical industrial X-ray equipment accounting for the balance.

Figure 141 shows industry shipments by major end-use categories. Surgery and direct patient care leads end uses, followed by diagnostic, therapeutic, and prosthetic devices. The large category labeled as supplies, other, or not specified is included to show that many different products accompany the major end uses. This last group, however, consists of many products used in multiple contexts and cannot therefore be definitively assigned to a function.

KEY PRODUCERS/MANUFACTURERS

A very large number of companies make medical instruments and auxiliary products used in support of diagnostic, therapeutic, surgical, and treatment procedures, as well as products implanted into bodies to perform supportive functions. As part of the most recent full Economic Census published by the Census Bureau, some 5,365 companies were active in this industrial segment, operating 5,858 establishments. These data, derived as they are from five different industries, somewhat exaggerate total corporate participation in that leading companies in surgical and medical instruments also participate in manufacturing surgical appliances and supplies. If we assume that all companies in surgical/medical instrumentation participate in surgical appliance production as well, the total number of companies would be approximately 4,200 participants. Following, key participants in the medical instruments industry are highlighted.

Johnson & Johnson

The largest U.S. participant, and a leader globally as well, is Johnson & Johnson (J&J). The company began in 1887 in New Jersey when three Johnson brothers—Robert Wood, James Wood, and Edward Mead—joined to manufacture antiseptic bandages. In 2006, 119 years later, the company had worldwide sales of $53 billion, 122,200 employees, and, through the activities of 250 operations present in more than one hundred countries around the world, sold medical instruments valued at $20 billion under its medical devices and diagnostics segment. J&J participates in the surgical, medical, and dental instruments markets by providing surgical, medical, therapeutic, and diagnostic instrumentation. The company also produces stents and artificial joints and devices used in orthopedic surgery.

General Electric Company (GE)

As its very name implies, this company is a major factor in irradiation and electromedical devices in the United States and around the world. GE is the largest company in this listing, with total revenues in 2006 of $163 billion, but its participation in the medical instruments market is but a part of its total sales. GE had revenues in that category in 2006 of $16.6 billion. The company's products include X-ray machines, CT and PET scanners, MRI devices, ultrasound equipment, and EKGs. All told the company offers twenty-seven different categories of products and systems to the medical instruments market, each itself expanding into multiple product lines. Among these categories are instruments/systems serving anesthesia, bone density measurement, mammography, infant care (including incubators), nuclear medicine, radiopharmacology, respiratory care, patient monitoring, and several other functions—in addition to the imaging systems mentioned at the outset. GE's competitors in what we have labeled the big machine category are the German firm Siemens Corporation and the Japanese Toshiba Corporation.

Medtronic, Inc.

This company has been associated with heart pacers ever since the company, founded in 1949 in Minnesota, launched the category in 1957 by introducing the first externally worn pacemaker and, in 1960, the first reliable implanted pacemaker. So close has this association been that the full range of Medtronic's medical instrumentation products is not well known by the general public. The company had sales in 2006 of $12.3 billion. Of that total pacers represented 40 percent and defibrillators (external, implanted, and used in emergencies) 3 percent of sales. The bulk of Medtronic's instrument sales were divided into six other categories of devices serving therapeutic, diagnostic, and monitoring functions in spinal (21%), vascular (9.8%), neurological (9.6%), diabetes treatment (7%), cardiac surgery (5.7%), and ear, nose, throat (ENT, 4.4%) applications. The company sells its products in 120 countries around the world.

Boston Scientific Corporation (BSC)

This company was formed by John Abele and Pete Nicholas, when they acquired Medi-tech, Inc., a pioneer in non-invasive surgery based on steerable catheters. These devices are very fine tubes inserted through arteries or other passageways of the body; tiny instruments attached to wires running through the catheter are used in modern surgery; they can also be used to look into the body. Medi-tech's acquisition, and BSC's founding, took place in 1979. Since that time the company has grown by acquisition into a major medical instruments firm with sales in 2006 of $7.8 billion. One of the company's acquisitions was that of Guidant Corporation, another leading producer of pacemakers and cardiac surgery equipment. Boston Scientific is a leader in catheter technology and related surgical systems, in endoscopy (devices that permit the physician to look into the body), vascular system repair, and other specialized techniques.

Stryker Corporation

This leading company in orthopedic devices and surgical instruments is based in Kalama-zoo, Michigan. It was founded by Dr. Homer Stryker, an orthopedic surgeon who invented products when he couldn't find the right ones on the market. Among his earliest inventions were a special heel for injured persons, a hospital bed frame that could be manipulated, and a saw for cutting through casts without injuring the patient. The company began in 1946 as the Orthopedic Frame Company, renamed Stryker in 1964. Stryker is a leading provider of orthopedic products in the United States. Its sales in 2006 were $5.4 billion. Of that total artificial implants, including knee and hip joints, earned $3.1 billion, orthopedic surgical devices brought in $2.0 billion, and other products $300 million. Endoscopes and sterilization systems were part of the category referred to as other. Stryker also offers its own proprietary picture archiving system, used by imaging departments in hospitals and laboratories.

Abbott Laboratories

With 2006 sales of $27.4 billion, this corporation is best known as a pharmaceuticals company. In that year, however, Abbott was also a significant participant in the medical instruments field with sales in the category of $5 billion, most of that ($3.9 billion) in diagnostic equipment and the rest ($1.1 billion) in products/systems related to vascular surgery. In its annual report for 2006, Abbott announced that it would, at least in part, leave the medical instrumentation business. Abbott reported negotiations with General Electric which would result in the sale of its core diagnostic activities to General Electric in 2007, Abbott retaining only its products associated with molecular diagnostics and diabetes care product lines. Molecular diagnostics is a specialization for detecting cellular pathology, including cancer screening.

St. Jude Medical Inc.

This company, based in St. Paul, Minnesota, is a leading producer of heart valves and related medical instruments, devices, and systems. The company was founded in 1976 and implanted its first heart valve the year after. Since that time the company has developed into a leading producer of cardiac devices with sales in 2006 of $3.3 billion. Most of the company's business (62%) is associated with cardiac rhythm control, cardiology devices used in heart surgery (14%), defibrillating equipment (10%), and heart valves (9%), the remainder being instruments for nerve stimulation.

MATERIALS & SUPPLY CHAIN LOGISTICS

Medical instruments are almost always high-technology devices of some complexity, be that in the metallurgy employed or in the multiple components of which they are made. No single element, compound, or amalgam is required in most or the majority of instruments. The industry's distributional logistics, however, are significantly influenced by regulatory requirements.

FDA Regulation

Regulation of medical devices, in a manner analogous to the regulation of drugs, was vested in the Food and Drug Administration (FDA) by three acts of Congress. There are the Safe Medical Devices Act of 1990, the Medical Device Amendments of 1992, and the Medical Device and User Fee and Modernization Act of 2002. The Food and Drug Administration Modernization Act of 1997 also has some bearing on device regulation.

Products are grouped under three classes. Handheld surgical devices, gloves, and bandages are examples of Class I. Such devices are covered by general controls. Firms must be registered and must adhere to good manufacturing practices as specified by law (21 Code of Federal Regulations 820). Products must be made known to the FDA on a specialized medical device listing (FDA Form 2892) and must also adhere to labeling regulations. Class II products include powered devices like motorized wheelchairs, pumping systems, surgical drapes, and similar products producing higher risks for patients. Products are also typically placed in this class if they are minor modifications of products requiring formal Class III approvals. Special labeling requirements are typically imposed. Class III products, examples of which are implantable devices, require premarketing approval (PMA) by the FDA in a formal process known as a 510(k) Submission, which may require clinical tests ahead of approval and mandate follow-up patient monitoring surveys after the product enters the market.

Manufacturers of devices and initial importers of medical devices must be registered. Wholesale and retail distributors are exempted if they do not in any way participate in production activities. Large manufacturers who operate overseas face similar requirements from regulatory bodies in other countries. Taken as a whole, these legislated requirements—abstract when compared to physical management of materials supplies—influence the logistical distribution of goods in this sector.

DISTRIBUTION CHANNEL

Distribution of medical instruments is complex not only because the range of goods moved from factory to final use is diverse, but also because end users are grouped into many different institutional clusters and because, in efforts to contain costs, collective purchasing techniques are used. Large organizations like the Veterans Administration, procure products centrally, as do hospital systems representing multiple establishments in different geographical clusters. Customer groups are nurses, physicians, dentists, and veterinarians in private practice, hospitals and clin-ics operating independently or in groups, and diagnostic laboratories.

Producers sell directly to hospitals, group purchasing organizations (GPOs), and independent delivery networks (IDNs). They reach practitioners, hospitals, and clinics through wholesale distributors who sell directly to large organizations and to specialized retailers. Distribution of major equipment classes—such as hospital monitoring equipment, CT and PET scanners, and MRI machines—is facilitated by integrators who conduct site surveys, design installations, buy equipment or assist in acquisitions, and install systems in hospitals.

KEY USERS

The key users of medical instruments are doctors. Although such devices are ultimately used by the patient or on his or her behalf, the patient's role is usually passive. The role of technicians who, for instance, operate most of the diagnostic equipment in medical practices, hospitals, and clinics is also a fairly passive role.

Physicians are the key decision makers in this field. Physicians, at minimum, strongly influence even the choice of devices directly implanted in a patient's body. The doctor in charge has superior knowledge of the devices, the patient's condition and circumstances, and of a particular brand's track record in the doctor's practice, and also more generally. Surgical and medical devices used by the doctor directly on the patients are obviously used by the physicians and/or his or her assisting staff. Diagnostic equipment is typically used by technicians, but committees of physicians decide what kind of equipment and which brand to purchase.

ADJACENT MARKETS

Medical instrumentation is one class of what might be labeled furnishings of a medical environment. All the other product categories that make a medical practice, clinic, hospital, or diagnostic laboratory represent adjacent markets. One major category is furniture, including hospital beds, operating room systems, specialized cabinetry, and equipment categories dictated by the context of medicine, including emergency power supplies and specialized incinerators for hazardous biowaste. Transportation devices used by medical institutions are adjacent markets, including the common emergency vehicles and the unusual refrigerated containers to hold donated organs during air transportation from donor to recipient. Another major adjacent market is pharmaceuticals, which is one reason why many companies in medical instrumentation are also pharmaceuticals manufacturers. A third adjacent market is represented by special supplies directly related to treatment and surgery, including oxygen, disinfectants, cleaning supplies, linens, pillows, blankets, uniforms, and a wide range of other products not already included in the categories listed above.

RESEARCH & DEVELOPMENT

R&D in this field is inseparable from medical research as a whole. The great diversity of products is such that any discussion of this subject except in the most superficial way goes beyond the scope of this essay.

R&D is centered around advances in materials science, especially the emerging field of nanotechnology, the science of the very small. This is illustrated by the work of the FDA's Nanotechnology Task Force which issued a report on the subject on July 25, 2007. Dr. Andrew von Eschenbach, Commissioner of the FDA, commented on the report by saying, "Nanotechnology holds enormous potential for use in a vast array of products… Recognizing the emerging nature of this technology and its potential for rapid development, this report fosters the continued development of innovative, safe and effective FDA-regulated products that use nanotechnology materials." Nanotechnology not only promises human-made materials of unusual characteristics, it also foreshadows complex devices at microscopic sizes. The prospect of tiny robots traveling the circulatory system or settling into organs to do work rightfully alerts the FDA to the need for early steps to regulate such devices.

Extreme miniaturization in semiconductor technology was also taking place in the first decade of the twenty-first century, suggesting that communications with—and therefore control over—tiny devices is already possible. In 2007 transistors on the market were 65 nanometers (nm) in size. A nanometer is one billionth of a meter. A human cell is around 10,000nm, thus 150+ times the size of a transistor. Transistors in the 45nm size category were projected for the 2008–2009 period, with others on the drawing boards for 32 and 22nm. Such developments in computerization suggest increasing resolution for diagnostic devices with, eventually, cell-level imaging potentially available.

CURRENT TRENDS

The emergence of minimally invasive surgical interventions, which became visible in the mid-1990s, continued in the first decade of the twenty-first century, thanks to miniaturization in instrumentation and improvements in technique, including systems for lighting inside the body and improving synthetic, flexible tissues used to extract diseased organs in bags through very small openings. This field, called laparoscopy (referring to the Greek for abdominal wall) or thoracoscopy (referring to the chest cavity), has been used in operations on the gallbladder, kidney, colon, and other internal organs, including application in gynecology and urology. Cardiac operations using catheterized access is another category used for repairing arteries, inserting stents, and repairing heart valves. Minimally invasive joint-replacement techniques were also taking hold.

The high costs of successful advanced imaging systems and their operations were increasingly drawing the attention of funding agencies, with both public bodies and for-profit consultancies arising to bring costs under control by better management of very expensive resources.

TARGET MARKETS & SEGMENTATION

Most products in this industry are designed for specific functional categories such as surgery, diagnostics, or therapy. Within such categories equipment is specialized by medical approaches to different systems of the body—the circulatory system, the endocrine system, and the nervous system, for example. Product development is stimulated by problems in different branches of medicine, and targeting of products is aimed at specialists who, through technical publications, gave impetus to the products in the first place.

RELATED ASSOCIATIONS & ORGANIZATIONS

American College of Radiology, http://www.acr.org

American Society for Therapeutic Radiology and Oncology, http://www.astro.org

American Society of Anesthesiologists, http://www.asahq.org

American Society of Echocardiology, http://www.asecho.org

American Society of Nuclear Cardiology, http://www.asnc.org

Association for the Advancement of Medical Instrumentation, http://www.aami.org/index.htm

Association of Surgical Technologists, http://www.ast.org

Clinical Magnetic Resonance Society, http://www.cmrs.org

International Society for Magnetic Resonance in Medicine, http://www.ismrm.org

Radiological Society of North America, http://www.rsna.org

Society of Computed Body Tomography & Magnetic Resonance, http://www.scbtmr.org

The Society of American Gastrointestinal and Endoscopic Surgeons, http://www.sages.org

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see also Pharmaceuticals